Park selects new finance minister amid scandal

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Park selects new finance minister amid scandal

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Yim Jong-yong, the nominee for minister of strategy and finance, details his policy direction on Wednesday at the Central Government Complex in Jongno District, central Seoul. [NEWSIS]

President Park Geun-hye’s nominee for minister of strategy and finance signaled a tough approach to handling the country’s recent real estate boom and argued for expansionary macroeconomic policy after he was appointed to the top economic post on Wednesday in the wake of the political scandal involving the president’s confidante Choi Soon-sil.

Yim Jong-yong, the president’s choice to replace Yoo Il-ho, a former politician, is a veteran bureaucrat and current chairman of the Financial Services Commission, the country’s financial regulatory agency.

Her choice of a current bureaucrat has been interpreted as a move to seal her economic initiatives as she enters the final year of her presidency amid a grim economic outlook and snowballing scandal that could detract from major agenda items like industry deregulation and restructuring.

The nominee vowed to curb speculative investment in real estate, which has widely been seen as the culprit behind housing bubbles in some of the country’s most popular neighborhoods and responsible for the recent rise in household debt.

“[My] basic principle is that speculative investment in property is unacceptable,” Yim said during a speech Wednesday after his nomination, “since real estate speculation will stunt economic growth.”

The government is set to announce a set of new regulations targeting the overheated real estate market today, and the policies are expected to be consistent with Yim’s stance. The key question is whether the government will designate Gangnam District, an affluent area where a housing bubble is forming, as a special watch region to regulate speculative investment.

When Yim was asked whether he would follow with expansionary policy, he said, “For now, it is necessary because the economy is still stuck in low growth, and it will likely face further headwinds at home and abroad.”

Yim is a seasoned public bureaucrat who began his career at the Ministry of Finance and Economy (the predecessor of the Ministry of Strategy and Finance) in 1981. He devoted much of his public service career to the ministry until 2008, when he left to serve as an economic and financial secretary under Lee Myung-bak’s administration from 2009 to 2010 during the peak of the global recession.

Yim is credited with steering the economy well during the recession. In 2010, he served as first vice minister in the Ministry of Strategy and Finance and crafted measures to ease fluctuating capital outflow, which has become a major part of his legacy.

Many believe Yim’s lengthy experience in financial policy will draw less controversy than Yoo Il-ho, who was a scholar-turned-lawmaker of the ruling Saenuri Party.

“Yim has been leading the Financial Services Commission and is very familiar with stabilizing financial markets,” Seo Dae-il, an analyst at Mirae Asset Financial Group.

“Yoo, on the other hand, is a scholar who studied fiscal policy for a long time, and he was always cautious about not spending too much money. I believe the government might be able to expand its ability to push through more fiscal policies and other stimulus packages if Yim gets approval.”

Yim is also one of few public officials in Korea who has substantial experience in the private sector. From 2013 to 2015, he was chairman and CEO of Nonghyup Financial Group.

Some high-ranking figures in financial circles believe his experience in the private sector will translate to a prudent and practical approach when devising and undertaking policies related to industry restructuring and deregulation.

During an interview with the Korea JoongAng Daily earlier this year, Hwang Young-key, chairman of the Korea Financial Investment Association, said Yim has a deep understanding of the financial sector and is one of few Financial Services Commission chairmen who has held consistent on the issue of deregulation.

While Yim is highly praised, the Choi Soon-sil scandal has damaged the reputation of Park Geun-hye’s administration, leading some to wonder whether it will have any influence in pushing through economic policies for the remainder of her presidency.

“There are various uncertainties that might drag down the local economy in the near future,” said Ha Kun-hyung, a researcher at Shinhan Investment. “The government needs to come up with fiscal or monetary policies to deal with such uncertainties, but they can’t do it right now due to the Choi Soon-sil scandal.

“The country currently doesn’t have the control tower [leadership] necessary to solve any problems. And I also don’t think Yim will have the power to push through such policies even if he gets approval from opposition parties, considering current political conflicts.“

Soh Jae-yong, an economist at Hana Financial Investment, noted that “his role might become more politicized considering the current situation.”


BY PARK EUN-JEE, KIM YOUNG-NAM [park.eunjee@joongang.co.kr]

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